WASHINGTON (Bloomberg) — Two leading US lawmakers proposed legislation that would impose new taxes on non-US banks that refuse to disclose the identity and contents of accounts owned by Americans. The measure would impose a 30 percent withholding tax on income from US assets held by foreign institutions that refuse to identify American account holders and report account balances, deposits and withdrawals.

The legislation, to be introduced by Senate Finance Committee chairman Max Baucus and House Ways and Means Committee Chairman Charles Rangel, will strengthen an Internal Revenue Service programme in which foreign banks agree to confirm US depositors' identities and notify the IRS of income earned in the accounts.

The so-called Qualified Intermediary program was criticised by lawmakers after UBS AG admitted violating it by helping tens of thousands of Americans secretly deposit their money offshore. President Barack Obama said he supports the bill.

No Bermuda bank we contacted yesterday could supply a comment by press time. "A small number of individuals and businesses hide their assets overseas solely in order to shirk their responsibilities, even as the vast majority of hard-working Americans honour the obligations of citizenship and fulfill their responsibilities," Obama said in a statement.

Treasury Secretary Timothy Geithner said the bill would "help narrow the tax gaps and create the fairer tax system we need."

The proposed withholding tax is one of 13 provisions aimed at punishing tax havens that are projected to generate $9 billion in revenue over the next decade.

"These tax evaders cost our country tens of billions of dollars every year in unpaid taxes, and honest, law-abiding taxpayers pay the price," Baucus said in a statement.

"It is expected that foreign financial institutions would comply with these disclosure and reporting requirements in order to avoid paying this withholding tax", according to a summary of the legislation. That additional compliance is projected to generate about $3.1 billion in tax revenue over the next decade.

The legislation also would impose $1.6 billion in levies over the next decade on foreign investors who try to avoid withholding taxes on dividend payments by using a derivative transaction known as a total return swap. The bill, which builds on draft legislation circulated in March by Baucus, will be introduced yesterday, said Matthew Beck, a spokesman for the Ways and Means Committee.

It stops short of more sweeping changes proposed by Michigan Senator Carl Levin, a Democrat whose Permanent Subcommittee on Investigations held hearings exposing UBS's efforts to solicit US customers in violation of the Qualified Intermediary programme.